A proposed decree would see Italian telcos receive a tax break until 2025
According to a report seen by Reuters, Italy’s Ministry of Enterprise and Made in Italy (Mimit) is reportedly drafting a new piece of legislation that incorporates measures worth almost €1.5 billion in support for the nation’s telecoms sector.
The decree would see an existing energy-related tax break extended to the telco sector, as well as the introduction of further tax reductions on energy bills for companies deemed to be of national strategic importance, such as network operators.
Combined, these tax relief mechanisms could result in savings of up to €1.2 billion for telcos until 2025.
In addition to these tax breaks, additional measures being considered include €200 million in funding to support operators in transitioning their existing copper networks to full fibre and €145 million to fund early retirement schemes and hire younger replacements.
The relief package is reportedly not yet finalised and would still require approval by the cabinet before being enacted. Some measures could also require the approval of the European Commission.
The Italian telecoms sector has been struggling to perform under the weight of intense competition for many years now, most notably since the introduction of mobile newcomer Iliad Italia in 2018. Offering mobile services at a greatly reduced rate, Iliad’s launch marked the beginning of an aggressive price war in the company’s mobile market that still continues to this day, leaving the telco sector struggling for growth.
Indeed, these slim profit margins have already forced some major changes in the industry in recent years, most notably for the nation’s largest telco Telecom Italia (TIM), which is undergoing a significant strategic shift under new CEO Pietro Labriola. This transformation involes spinning off the company’s infrastructure and service arms into separate business units to encourage external investment.
Investment firm KKR and state-owned lender Cassa Depositi e Prestiti (CDP) are currently embroiled in a bidding war to take control of TIM’s would-be-spun-off infrastruture unit, for now still dubbed NetCo.
Vodafone Italia too continues to struggle, with their most recent Group results earlier this year showing a lacklustre performance in Italy.
Both TIM and Vodafone announced major staff reduction plans in Italy last year as part of wider cost-saving measures.
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